Vortrag Rogers

8/3/2019 Vortrag Rogers

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International Business NegotiationsAn Overview

Dr Helen Rogers


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Business Negotiations

Negotiation is something

that everyone does, almostdaily


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Characteristics Common to All Negotiation Situations

There are two or more parties

There is a conflict of interest between them

Parties negotiate because they think they can get a better

deal than by taking what the other side will give them

Parties prefer to search for agreement rather than:

Fight openly

Capitulate

Permanently break off contact

Take their dispute to a third party


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Characteristics Common to All Negotiation Situations

Parties expect give and take. They expect both sides willmodify or give in somewhat on their opening statements or

demands

Successful negotiation involves:

The resolving of tangibles e.g., the price or the terms of agreement

The resolution of intangibles

underlying psychological motivations


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Why Negotiate?

(1) To create something new that neither party couldattain on their own

(2) To resolve a problem or conflict between the parties

Negotiations occur for one of two reasons:


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Functions of Conflict (+)

1. Awareness of problems

2. Allows change and adaptation3. Strengthens relationships (intra-group)

4. Awareness of self and others

5. Encourages psychological development (realistic in self-

appraisal)

6. Can be stimulating and fun


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Types of Negotiation

1. Distributive bargaining (win/lose)

e.g. labour management negotiations

vs

2. Integrative negotiation (win/win)

e.g. business negotiations

Fisher & Ury (1991) divide the pie, versus larger pie


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Framework for International Business Negotiations

Atmosphere

Conflict / cooperation

Power / dependence Expectations

Background factors

Objectives Environment Third parties Negotiators

Ghauri (1996)


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Framework for IBN (Ghauri,1996)

Conceptual model of business negotiation process

Highlights importance of planning and preparation in successfulnegotiations

Negotiation strategy: overall guideline, indicating direction totake, based on wishes, needs and objectives

Negotiation tactics: follow after strategy providing a line of

action


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Stage 1: Preparation

Identify contents of the deal

Create alternatives

Put yourself in their shoes

Gauge the appropriateness of the message

Build up relative power

Understand cultural differences


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Stage 2: Face-to-Face

Who within the firm should negotiate

Expendable person

Individual versus team

What makes a good negotiator

Patience


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Stage 3: Post-Negotiation

Clarity of the agreement

What is a good outcome?

Can no agreement be a good outcome?

Are contracts used after signing?


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Cultural Factors

Differing definitions of negotiation

Differing degrees of protocol Communication processing information, argumentation

Views about time

Risk taking

Balance of group think vs individuality

Nature of agreements oral vs written Intervention of lawyers

Ghauri (1991); Lewicki (2003)


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Trust in cross - cultural negotiations

Limited number of studies

Indications that national culture influences how trustbuilds among negotiators

Trust affects the perceptions re ethical behaviour ( trustlevel< > use unethical negotiation tactics)

A multicultural team increases the chances of a win-win

outcome

Elahee et al. (2002)


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the "what" if the negotiation fails often if win-win cant be achieved, going for a no dealcould be the best answer.

1. Separate the people from the problem

2. Dont bargain over positions

3. Insist on objective criteria

4. Develop your best alternative to negotiated agreement (BATNA)

Getting to Yes - BATNA

Fisher & Ury (1991)


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Getting to contract - some practicalissues to negotiation


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Contract award criteria include:

Contract award criteria: 10 suggested attributes [Cousins]

1. price

2. delivery3. quality4. innovation

5. level of technology6. culture7. commercial awareness8. productive flexibility9. ease of communication10. current reputation

Note: qualitative nature of some of these


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Getting to Contract Stage

Arriving at handshake stage- between two or more parties

interesting process

Negotiations may take 10 minutes, 10 hours, 10 days or10 weeks

Depending on many factors inc. nature of relationship complexity of order flexibility / room for manoeuvre


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Preparation

Establish scope- whats in and whats out?

Clarify bottom line

Justify scope & determine areas of flexibility- good practice

Brainstorm what..ifs

- encourages creative solutions


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Characteristics of Negotiations

Initially can be very slow going

Why?- both parties have clear agenda of what they want to achieve fromthe agreement

All issues debated and each side will not give too muchground

A: it is vital that this is includedin the spec.B: we cant possibly do all thatfor this price


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With time, deadlines become closer- pressure applied by management on

both sides to close the deal

Each party:

wish list

-inc. must-haves &nice-to-haves



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if you.. then I

- discounts will be offered on future deals- longer term collaboration may be discussed

Once the most of the must

haves have been achieved,compromises come into play



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Tactics

time out

good cop / bad cop

bring in the team bring in the heavyweights

- technical experts & senior managers

emotional outbursts

documentary evidence

sometimes e-mails provided as evidence ofimplied agreement

dont always hold around negotiation table

C


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A deal will eventually be struck

with a handshake


..followed up by immediate drafting of thecontract


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some companies take lawyers to all meetings- others keep it informal

- based on trust& knowledgeof negotiation teams

Success depends on:

Who has power in the relationship

- size of company

- importance of deal

Who has the best team of negotiators

S


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Success depends on:

Choice

- availability of goods from another supplierinterchangeably of supply

- X has been specified by final customer

Whos need is greater- time constraints

detrimental in long term but may be pursued if v. largeorder- cost excludes other options

S d d


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Autonomy of the contract

- there is less room to move if part of a large consortium

or have to fit into someone elses project schedule

Success depends on:

M i N ti ti S


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How do you measure success?

Reached agreement?

Both parties did what was agreed?

KPIs reached (%)

pre-agreed KPIs written into the contract; used as thebasis for measuring progress throughout contract term

Number of orders???

Measuring Negotiation Success

V d M t


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Vendor Management

Supplier rating schemes

ABC

Many parties make much work

Needs project management

Red / amber / green light system

V d R ti S t


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Vendor Rating Systems

What?

Vendor rating is used to measure, evaluate & improve supplier performanceto ensure that companies make informed sourcing decisions

How?

1. Objective, regular and systematic evaluation against pre-agreed criteria

2. Benchmark supplier performance against performance of similar suppliers used

3. Measure against fulfilment of specific objectives e.g. contract SLAs

4. Awarded points on a standardised weighted points scale

Two way process:

Useful feedback to suppliers to identify action plans & ways to improve

Contract Reviews


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Contract Reviews

How else should you evaluate progress on during a contractterm?

Agree on a schedule of audits- classic project management charts

- detail projected against actual progress

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2

Arrange review meetings

- nominate project managers who monitor progress fromboth parties

Contract Reviews


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Visits to both company sites3

4 Additional incentives may be set- positive and negative- consistently high delivery reliability may warrant a one off

bonus

Contract Reviews

Use of Written contracts


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Use of Written contracts

Contracts are the work of the devil! (Macaulay, 1963)

Cost, time, energy/relationship testing to agree them

So.why do most companies use them?

1. As a communication tool expectations clearly set out

2. Negotiators wish to reduce perceived uncertainties especiallywhen doing business for the first time

3. Drawing up a contract is the normal thing to do contractsymbolises the existence of a deal

.In other words, when usefulness is perceived as greater than cost

Roxenhall and Ghauri (2004)

Use of written contracts


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Use of written contracts

An extensive contract is more cumbersome than a simple one

Unilaterally vs bilaterally written

- depending on the relationship between the parties

Boilerplate standard contracts vs bespoke contracts

The longer lasting the business deal, the less the contract is used

Contracts rarely used except in times of conflict (Tung, Gulbro &Herbig)

Roxenhall and Ghauri (2004)


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Vortrag Rogers